STOP, before you comment.

[Greyfox]

The first paragraph above came from wikipedia.
Sorry for not mentioning that.

[Dave Schwartz]

Also, I have one problem with everyone on this board. It's the three letters "ROI". Nobody seems to use it properly. It's not just a number that sits out there to amaze others. ROI is heavily dependent on time. In business, it would be an ROI across x years. Pull out early and sacrifice your ROI. In racing, it can't be used the same way.

I would suggest that you are the only one that uses it that way in horse racing.

The normal usage (in racing) is relative to the amount risked.

I think that in our vernacular what you are referring to would be called growth.


But truthfully, it is a matter of semantics, don't you think? As long as I say "potatoe" and you know I am not talking about an avocado.


Regards,
Dave Schwartz

[Greyfox]

Right on Dave.
You Say Tomato And I Say…Tomahto

But like Aqueduct the other day where I couldn't see the horses,
there's a lot of fog. Nothing "concrete" has been put forth by
Speculus that you or I can even start to examine.

[GameTheory]

I would agree that ROI is not the most important thing. And to maximize bankroll growth, you usually have to sacrifice some ROI....

[singunner]

Dave,

Well put, but it still seems to me that the racing version of ROI suffers from inconsistency based on how much you are able to bet. Formula2002 put forth a theory the other day (all be it disproven now) that he had somehow gotten a rather large ROI, but it was from something like 500 plays over a year across multiple tracks out of a very large sample. What I'm saying is that if he had really gotten that ROI legitimately, it would still present hte problem that you're only getting that ROI less than 2 times per day while having to watch every track open to you.

Maybe I'm just saying that I see ROI as all but worthless for being a measure of a handicapping strategy. At best, it seems to be one facet of a proper description, but in usage here, it seems to be all anyone talks about. I rarely see people mention sustainability or growth or potential or anything I might expect in a normal conversation concerning money management. Could it be that it really is true that almost nobody is actually winning in this game, and thus such issues do not have much call to be discussed?


Also, if I point to the man in the corner and say "that worthless son of a bitch", and you say "my cousin Larry?", you may agree that we both know what we are both talking about the same thing, but there is a significant difference. No insult intended towards your cousin Larry.

[Dave Schwartz]

Maybe I'm just saying that I see ROI as all but worthless for being a measure of a handicapping strategy.

I believe you are confusing strategy and tactics.

Strategy is what you plan to do to win the war.

Tactics as what you plan to do to win the battle.


What you are atritculating is that uou want to measure the progress of the war, while horseplayers use it to measure the progress of the battle.


If I understand you right, what is important to you is how much a given approach causes your money to grow. And that is fine for you.

However, it is accuracy of the indivdiual horse's expected return (personally I prefer $Net to R.O.I. anyway) that enables the player to achieve (or not) the long term growth. And even that is not exactly true- it is actually the effectiveness of the player's exploitation tactics that really make it work or not work.


Bearing in mind that most horseplayers would not like to waste time discussing anything that is not about selection, spending our time discussing this is really not a good use of our resources. (Translation: I have only got so many brain cells and am incapable of multi-tasking. What say you we turn the page?)


Dave

[GameTheory]

I think he is right in the sense that horseplayers get obsessed with ROI and become very selective about their plays to increase it, when they could actually make more money with a lower ROI (but still positive) and more volume...

[PriceAnProbability]

Originally Posted by GameTheory

I think he is right in the sense that horseplayers get obsessed with ROI and become very selective about their plays to increase it, when they could actually make more money with a lower ROI (but still positive) and more volume...

It's more like they think that analyzing their batting average is better than taking batting practice.

What's really fueling this, however, are the number of products on the market that do nothing more than create money-management schemes designed to exploit a handicapping advantage that is far more difficult to construct, let alone sell.

[speculus]

As promised, here I offer my definition of money management:

Simply put, money management is a decision about “how

much money to put on the next bet”, based on a hope

that, by fluctuating the bet size, a flat-bet winner may be

able to maximize the bankroll or return on investment (ROI),

or both; and a flat-bet loser may be able to minimize the

loss (of bankroll) or negative ROI, or both.

[PriceAnProbability]

Originally Posted by speculus

As promised, here I offer my definition of money management:

Simply put, money management is a decision about “how

much money to put on the next bet”, based on a hope

that, by fluctuating the bet size, a flat-bet winner may be

able to maximize the bankroll or return on investment (ROI),

or both; and a flat-bet loser may be able to minimize the

loss (of bankroll) or negative ROI, or both.

Why would one fluctuate the bet size on bets with equal probability?

[singunner]

That's the "what", but it doesn't even hint at the "how".

And thank you all for your opinions on the ROI issue. I'll try to keep them in mind henceforth reading anything related to ROI. I may differ in my opinions on how it should be treated, but as long as I know how you all treat it, I can probably rectify the differences on my own and avoid confusion.

Language is often an ineffectual communicator, but it's the best we've got.

[Dave Schwartz]

I think he is right in the sense that horseplayers get obsessed with ROI and become very selective about their plays to increase it, when they could actually make more money with a lower ROI (but still positive) and more volume...

Now THAT I agree with.

IMHO, it begins with being able to achieve the state of profitable expectation. Once you have that, you should win something.

Next it is time to worry about how much growth and whether or not it is a viable strategy as an investment plan.

Strategy and tactics.


Dave

[GameTheory]

Originally Posted by PriceAnProbability

Why would one fluctuate the bet size on bets with equal probability?

Because you have more or less money in your pocket (the bankroll) than you did the bet before, and even if the probability of winning the bet may be the same, the potential unit payoff (the odds) on this bet may be higher or lower than the last thus affecting the positive or negative expectation (the edge). The risk/reward scenario is different, and money managment (in general) attempts to balance risk & reward to make you the most dollars in the shortest amount of time.

[JustMissed]

How about calling positive ROI=Net profit

Call negative ROI=Net loss

Call your bankroll=Inventory

Call each $2 wager=Unit of inventory

Call your wager payoff=Sales price

Now, pretend that your horse racing business runs exactly the same as a grocery store.

Then pretend your store is losing money and you need to come up with a way or ways to make it profitable.

If you can figure this out then you can easily figure out the same thing to do in your horse racing business.

JM

[zerosky]

Originally Posted by speculus

Can there exist a money management formula/method that can convert a negative edge to a positive roi? Something like a flat bet loss of 16% to a positive ROI of 20%?

My money’s on the don’t…not from any rigorous intellectual argument but surely if there was then there wouldn’t be any more gambling….

I like these kinds of threads though…interestingly enough I was reading about Parrando’s Paradox recently, which ‘Theoretically’ combines two losing games into one profitable one…

http://tinyurl.com/yzay8e

rgds

zerosky